MADISON, Wis.-Real estate loans, which had been a primary driver of credit union lending growth in the first half of 2012, have become something of a drag on CU loan portfolios, even as 2012 is on track to show overall lending growth.
According to analysis released as part of CUNA Mutual Group's Trends report, data through July show lending continues to grow at credit unions, with growth now coming a resurgence in vehicle lending, along with consumer credit. The CUNA Mutual analysis, which is based on data assembled by CUNA, shows total loans are up 1.8% YTD and 3.2% since July 2011. Roughly 44% of this $18.8-billion gain is attributable to vehicle lending. On a YTD basis, the vehicle contribution is almost 62%.
CUNA Mutual Senior Economist Dave Colby pointed out that credit unions have hit two significant milestones in vehicle loan activity: Annual growth for the total portfolio reached 5%, the highest level in more than six years, and new vehicle portfolio growth turned positive on a year-over-year basis for the first time in almost five years.
The data also show that annual growth through July in credit cards is 5.0% (CUs now hold 4.6% of all outstanding card balances) and MBLs are up 4.8% year-over-year. Total annual real estate secured loan growth is a positive 2.0%, but, as noted, the YTD gain is weaker at just 0.9%. Moreover, NCUA data show roughly 50% of all CUs reporting loan portfolio declines between Q2 2011 and Q2 2012. Student loans held by CUs are up 52% over the same period, but represent less than 0.3% of all CU loans.
Despite an 86 BP improvement in July, the loan-to-share ratio finished July at 67.9%, 183 BPs below July 2011.
* Surplus funds declined steeply in July. At $386 billion, surplus funds fell almost $11 billion (2.7%) during the month. A sharp decline in assets (related to deposit outflows as members draw down transaction accounts from the five payroll Fridays in June) and an uptick in loans, had the biggest impact. Despite July's decline, surplus funds are $35 billion (9.9%) above the July 2011 level. At the end of July, surplus funds equaled 37.8% of all CU assets, CUNA Mutual said.
* The average yield on average investments was 1.34%, while the cost-of-funds was 0.76%, leaving a 58 BP spread.
* Even with a membership surge, growth in savings per member remained solid at 3.3%, CUNA Mutual noted, representing a $50-billion inflow. Most of that has gone into regular shares and share drafts.
Assets Keep Climbing
* CUNA estimates show the nation's CUs ended July 2012 with $1.02 trillion in assets, a 4.0% YTD gain and 5.8% ($57 billion) year-over-year. However, not all CUs are growing assets, with 1,688 CUs reporting asset declines between Q2 2011 and Q2 2012. While this represents almost 24% of all CUs, these institutions held just 5.6% of industry assets.
* At the end of July, total CU capital stands at a healthy $105 billion for a 4.8% YTD gain. The industry capital-to-asset ratio of 10.3%,.
* At 7,181, the CU count is down 170 YTD and 299 since July 2011. The 193 CUs with assets in excess of $1 billion (2.7% of all CUs) hold almost 50% of industry assets. The 68% of CUs below $50 million in assets, hold less than 7%.
